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expansion purposes. You decided to issue semi- annual R1 000 bonds which pay a coupon of 10% for a 15-year period. A year after the bonds were issued, the interest rate in the market increased b 1,5%. Required a) What was one bond worth one year after it wa first issued? b) If your company issued 1 500 bonds at par in t

expansion purposes. You decided to issue semi- annual R1 000 bonds which pay a coupon of 10% for a 15-year period. A year after the bonds were issued, the interest rate in the market increased b 1,5%. Required a) What was one bond worth one year after it wa first issued? b) If your company issued 1 500 bonds at par in t

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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3.1 Your company was in need of R5 million for expansion purposes. You decided to issue semi- annual R1 000 bonds which pay a coupon of 10% for a 15-year period. A year after the bonds were issued, the interest rate in the market increased by 1,5%. Required a) What was one bond worth one year after it was first issued? b) If your company issued 1 500 bonds at par in the first year, how many would you still have to sell at the new present value?
Transcribed Image Text:3.1 Your company was in need of R5 million for expansion purposes. You decided to issue semi- annual R1 000 bonds which pay a coupon of 10% for a 15-year period. A year after the bonds were issued, the interest rate in the market increased by 1,5%. Required a) What was one bond worth one year after it was first issued? b) If your company issued 1 500 bonds at par in the first year, how many would you still have to sell at the new present value?
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